Buck McKeon Squealing Like A Stuck Pig As Obama Education Reforms Ax Costly Middlemen From Student Lending Process-- McKeon's Campaign Donors
In yesterday's NY Times Kate Zernike highlighted how the financial crisis is endangering higher education-- both on an individual and macro level. Her premise is that college will cut back on anything except student aid to avoid losing enrollment. Margins are so tight for many schools that they need full enrollment to get by. So their budget cuts will lay off personnel before cutting back on financial aid.
Ithaca College, in upstate New York, is laying off faculty and cutting its 401(k) contributions as part of $4.2 million in budget cuts, but it is also offering increased tuition discounts that will make up the largest financial aid budget in its history. The college, which relies on tuition for more than 90 percent of its budget, saw the dangers of losing students last fall, when it had 240 fewer than anticipated, resulting in a $5 million decline in revenue.
“The good news is that we haven’t taken as much of a hit in our budget as some institutions that rely very heavily on their endowments,” said Dave Maley, a spokesman for Ithaca, which has 6,000 undergraduate students. “The alternative is, since we rely heavily on enrollment, any loss in student numbers hits us harder.”
In a survey of 372 institutions in December, the National Association of Independent Colleges and Universities found that 93 percent said they were moderately or greatly concerned about preventing enrollment declines. Only 8 percent said they would cut financial aid, compared with 50 percent that said they had stopped hiring, 49 percent that had delayed construction or renovation and 22 percent that were freezing salaries.
...The colleges are also trying to hold down tuition increases. But increases in financial aid are not without consequence. At Ithaca, officials project that tuition discounts will result in a net revenue decline of $2.66 million and force the college to carry a $2.5 million deficit, its first since the 1950s.
For the sake of the country's future, President Obama has stepped up to the plate with billions of dollars in student loan money. 85 billion to be precise-- per year! Sounds like a lot, right? But that actually saves the taxpayers $4 billion a year. I'll explain in a moment. Predictably, California reactionary Buck McKeon, who represents an ill-educated district in the high desert northeast of L.A., is screaming bloody murder. Why McKeon? As we learned when we tried helping Robert Rodriguez oust this venal fossil in 2006, McKeon, as ranking Republican (then Chairman) of the House Education Committee, is in the pockets of the corrupt student loans industry. He's snorted up legalized bribes from Finance companies, lobbyists and the Education industry totaling over $550,000 and is widely considered one of the most corrupt California members of Congress, nearly on a Jerry Lewis/Ken Calvert level. So it was highly predictable that he would rant and rave when Obama's generosity towards students would anachronize his patrons. Friday's Washington Post explained it beautifully, pointing out that by directly giving the student loans to students and cutting out the greedy middlemen (i.e.- McKeon's "contributors") Obama saves the taxpayers $47.5 billion over the next ten years and, at the same time, helps far more students-- two factors that aren't exactly McKeon goals. Since the government assumes all the default risk, there is no reason at all to involve the finance companies.
Last year, dozens of lenders stopped issuing federally guaranteed loans, prompting concerns about whether students would get the money they needed for college. The Bush administration took several steps to shore up student lenders.
Yesterday, Education Secretary Arne Duncan signaled a shift from that approach, saying the program that subsidizes private lenders is "on life support."
"Rather than continuing to subsidize banks, we want to help dramatically more students get more access to more aid," Duncan said in a conference call with reporters. "Big picture... We're going to save about $24 billion dollars over the next five years, and we want to actively invest that money in our students."
Education-oriented congressmembers, like the new Education Committee chairman, George Miller (D-CA), "who has been a vocal critic of what he has called 'corrupt practices' in the student loan industry, said the proposal was a 'a solid plan to make federal student loans more reliable while saving taxpayers billions of dollars.'" McKeon, sensing a cutoff in campaign donations and bribes, is furious-- and pushing back, screaming "socialism." (Keep in mind, Republicans only approve of socializing downside, so that losses go to taxpayers. When profits are available, as long as they get a cut, it all needs to go to private enterprise, even if the enterprise is meaningless or even detrimental to the task at hand-- as it has been in this case.) Ole Buck calls the shift a "government takeover of the private-sector-based student loan program, taking away options and benefits from students while adding tens of billions" of dollars to the deficit. Not only is he either so misinformed that he's obviously way over his head-- even for a Republican-- or he's just distorting the facts to make political points with Rush Limbaugh listeners. In either case, he certainly didn't mention how detrimental Obama's reforms would be for his campaign fundraising. To me it sounds like a model of how to deal with the mortgage banksters as well.